Thursday was a shortened day for investors yet the S&P and Dow pushed considerably higher. The SPX was up by 10.82 and the Dow moved higher by 92 points. All in all, not a bad day for being so short.
Market Direction S&P Intraday Chart July 3 2014
The one minute intraday chart for July 3 shows us that investors were pushing stocks higher from the morning open. The day started with a gap up and then sideways action until around 11:30. With no significant selling, investors bought into the early close and pushed the index to close at the high for the day.
Advance Declines For July 3 2014
Volume was light at just 1.8 billion shares. There were however 182 new highs and just 6 new lows. 55% of issues were advancing while 41% were declining. Up volume came in at 68% while down volume was 30%.
Market Direction Closings For July 3 2014
The S&P closed at 1985.44 up 10.82. The Dow closed at 17,068.26 up 92.02. The NASDAQ closed at 4485.93 up 28.19.
The Russell 2000 IWM ETF closed up 72 cents at $119.82 but still just off the all-time high.
Market Direction Technical Indicators At The Close of July 3 2014
Let’s review the market direction technical indicators at the close of July 3 2014 on the S&P 500 and view the market direction outlook for July 7 2014.
\
Stock Chart Comments: Stocks traded higher on Thursday closing at another new all-time high. Support continues to build at 1956. Each day that stocks close back above 1956 is slowly building light support. This may not last and it certainly won’t hold the market up at the present time but it is encouraging for more upside action.
Support levels at present are 1930 and 1919 which are light support. 1870 and 1840 are strong support. 1870 and 1840 at present mark important trading levels for investors. Both are now below the 100 day exponential moving average (EMA) so any pullback this summer which breaks 1870 should be used as a signal to commence picking up ultra short ETFs or spy put options 2 months out for a move lower. A break below 1840 at present would challenge the 200 day EMA however at the rate the market is moving higher the 1840 and 1870 will soon be below the 200 day EMA which is sitting around 1825 at present.
I have repeatedly mentioned two other support levels, namely 1775 and 1750. As the market continues to push higher, these are now critical support levels. 1775 is important but 1750 is now the bottom line. A break of 1750 would mark a severe correction of 11% at present which would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating as there are no signs of any impending correction of that magnitude.
My Pullback Outlook: I have been waiting for a pull-back this summer to between 1870 to 1919. The only pullback we may experience is from the overbought condition the market is once more in, or a shock in the next quarterly revenue numbers which will start unofficially on Tuesday July 8 with Alcoa reporting its revenue.
Momentum: For Momentum I am using the 10 period. Momentum has been the best indicator over the past eight months, replacing MACD as the most accurate indicator. Momentum is positive.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued buy signal on Thursday. This could be partly caused by the shortened day. We will know better on Monday after the close.
Ultimate Oscillator: The Ultimate Oscillator settings are: Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months. The Ultimate Oscillator is still overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change remains positive and is now moving sideways.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling market direction is up and it is extremely overbought.
Fast Stochastic: For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is signaling that the market direction is up and it is also extremely overbought.
Market Direction Outlook And Strategy for July 7 2014
All the technical indicators continue to point to strength for stocks. The S&P still has higher to move. After three days of holidays, markets may be a bit weak to start but I think will shoot higher from there. The outlook for Monday is for a higher close after a weak start in the morning.
I am looking for further opportunities for trades and will post them as I find them. On Monday, I am planning to enter the 4 trades I wrote about on Sunday. You can review those trades through this link.
For Monday, the market direction up may take a while to get started but I am expected another positive close.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)